The 21 per cent fall in venture capital investment in Ireland in the first half of 2006 is a ‘slightly worrying trend’, according to Ion Equity director David Fewer.
According to the firm’s latest Techpulse survey, investment fell to ?108.8 million in the first half of the year. The fall was due to poor investment levels the second quarter of the year, as a fall of 22 per cent was recorded on the the level of funding in the first quarter of the year and a 20 per cent fall on fundraising in the same quarter of 2005.
However, the figures may not be as bad as this when two deals valued at nearly ?15 million, which are in the process of closing, are included.
The number of actual deals in the first half fell from 27 in the first half of 2005, to 22 in the latest half-year, and this is partly due to a sharp fall in early-stage first round investments from 13 in the first half of 2005 to just six in the latest half year.
The fall-off is worrying, says Fewer, ‘as the number of first round fundraisings indicates the level of early stage technology companies getting the traction that enables to them to get that crucial first round finance’.
Fewer added that in the first half of 2006, some of the regular first round venture capital investors such as EVP, 4th Level Ventures, Shannon Development and Street Capital were not involved in any new deals. Of the three large Irish venture capital companies, Delta Partners has been active in the life sciences area and is reportedly close to two new deals in the UK. ACT was particularly active in the second quarter and was involved in three separate financings each worth in excess of ?9 million while Trinity Venture Capital completed one first round financing and two later round financings in the first half of the year.
The second quarter of the year also showed an increasing commitment by international investors and these accounted for some 75 per cent of the ?47.7 million invested compared to just 50 per cent in the same quarter of 2005.
Commenting on the prospects for the second half of 2006, Fewer said, ‘Despite the fall in the number and the value of deals in the second quarter, investment has remained reasonably strong in the first half. The second half of the year is generally the weaker of the two and it is unlikely that we will reach the ?200 million in venture capital investment we achieved last year,’ he stated. |
